NYTimes: A Government Bailout Saved the Auto Industry, but the City of Detroit was Left Behind

"Sometime soon, probably by the end of April, the city of Detroit is likely to run out of cash. Its revenues are falling and its expenses are growing. If that happens, paychecks will not be issued, doors of public buses and city agencies could be closed, and streetlights will be shut off in more neighborhoods.

Having lost so much — a quarter-million people in just a decade, its industrial base, its political clout — Detroit is now on the verge of losing control of its ability to make its own decisions. If it does not find a way to quickly stabilize its finances through spending cuts and union concessions, the state may appoint a manager to take over its budget from the mayor and the City Council.

No one, least of all the state, wants that to happen. In Michigan, emergency managers can break union contracts, fire city officials and sell off city assets. That has already begun in four other cities, all of them largely black, that the state has taken over in the last few years. Black officials and union leaders have charged that Gov. Rick Snyder, a Republican elected in 2010, has an ideological and racial agenda, and taking over Detroit, which is 83 percent black, would only magnify the tension.

Muscling the city aside would clearly be undemocratic, and it is not even clear how effective it would be. The state took over Detroit’s schools in 2009, and has little to show for it yet except for more closed schools and a continuing exodus of students and teachers. But an emergency manager may be inevitable.

Detroit simply does not have a large enough tax base to pay for city services and billions in long-term liabilities. The turnaround in the auto industry brought about by the government bailout has been good news for Michigan and the region, and has helped lower the state’s jobless rate to 9.3 percent from 14.1 percent in 2009. Little of that, however, has trickled inside the city limits, where the unemployment rate is estimated by city officials at close to 30 percent."